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INTERNATIONAL: MEDIA OWNER PROFILE: Gannett hits heights in print but falls short of TV stardom - The largest newspaper group in the US has not exploited its full potential, Richard Cook reports

There was a time in the early 80s when Rupert Murdoch was one
relcalcitrant bank away from meltdown. Time Warner wasn’t even a twinkle
in the merger maker’s eye, and Walt Disney was under pressure after a
string of film flops. Back then, the Gannett Corporation was the stock
to be seen with.

There was a time in the early 80s when Rupert Murdoch was one

relcalcitrant bank away from meltdown. Time Warner wasn’t even a twinkle

in the merger maker’s eye, and Walt Disney was under pressure after a

string of film flops. Back then, the Gannett Corporation was the stock

to be seen with.

But these days, the country’s fifth largest media group is barely known

outside its home base in the US.

The Virginia-based company is the largest newspaper group in the US by

circulation, and is the parent of one of the only two genuine national

newspapers in the US, USA Today. But the group that was once the darling

of Wall Street has failed to stage a spectacular take-off, either into

other forms of media or in the international arena.

Gannett raced ahead in the 70s, spending dollars 1.5 billion on

acquisitions and cornering the US regional newspaper market. At one

point, the company operated more than 100 newspapers with a combined

circulation of 6.3 million.

In the bus-shelter advertising market, its position was even more

dominant.

Gannett Outdoor Group operated three-quarters of the country’s 14,000

bus-stop shelters, and held the lucrative contracts in New York, Los

Angeles, San Francisco and Chicago.

But what really excited the pundits was the fact that Gannett seemed

prepared to make its media assets sweat in a way that the other big

players hadn’t been able to. The culmination of this was the launch in

1988 of USA Today on TV, a syndicated TV version of its flagship

newspaper, and seemingly an object lesson in how media companies should

go about exploiting their biggest brand names.

However, USA Today on TV flopped and sent Gannett scurrying from the TV

market just as everyone else was moving in. After getting its fingers

burnt, Gannett went into its shell, concentrating on improving

efficiencies in a declining newspaper market rather than embracing the

realities of the new-media market.

Suddenly, Gannett is no longer the hot stock. It’s not that it is doing

badly - far from it - it’s just that observers had expected so much

more.

When the former journalist and now the president and chief executive

officer, John Curley, announced two years ago that revenues were rising

in every operating division, and by an average of 15 per cent, he was

rewarded by the share price falling by 50 cents.

But where most bosses might have seethed inwardly and shrugged off the

criticism, Curley went for the jugular, accepting an invitation to speak

to analysts in New York. ’Many of you,’ he told them, ’have deep-seated

fears newspapers are passe, despite the fact that newspapers continue to

draw the audiences advertisers covet most.’

That remains the official Gannett position. But there are stirrings that

the cosy status quo is about to change. Chief among these was the

completion of the sale of Gannett Outdoor in August last year for

dollars 690 million, and the purchase of Multimedia Inc at the end of

1995.

The former means Gannett will not be able to enjoy the success of a

medium that enjoyed its biggest revenue leap for more than a decade in

1995, but it also means someone else will be trying to defend the city

contracts, most of which are set for review in the next few years. The

New York contract is due to be decided next year and has attracted

bidders such as More O’Ferrall as well as the indigenous firms.

The multimedia acquisition, on the other hand, did what many observers